Opinionated: Charging With the Sun

19 Mar 2019

You aren’t getting “green electrons”, but charging at the right times still lowers GHG emissions.

I spent a fascinating few days at the California Independent System Operator last month, following my appointment in January to the CAISO’s Board of Governors. The most exciting part was getting to visit the CAISO grid control room late on a Thursday afternoon as the sun was setting across much of California.

                    CAISO control room. Source: New York Times

It had been a fairly clear and cool day in the Golden State, lots of solar power production and fairly moderate demand. That meant that as the sun set, operators had to ramp up non-solar supply very rapidly. The personnel in the control room were relaxed and professional, but they were also busy keeping the system in balance as about 8 GW of supply from solar farms — about a third of the total demand CAISO was serving that afternoon — disappeared over the course of a couple hours.

Source: CAISO, Feb. 7, 2019

The scene got me wondering again why California isn’t doing more to coordinate end-use demand with electricity production from intermittent renewable sources. In fact, watching the efforts of the CAISO grid operators prompted me to take action to make their lives a tiny bit easier: I reprogrammed our hot tub to run its filter cycle in the middle of the day — the so-called belly of the duck — instead of later in the afternoon. If we had a programmable electric water heater, I could have also set it to heat during the duck’s belly, but we are sadly still combusting natural gas for our hot water and space heating.

CAISO supply by source, Feb. 7, 2019

In discussing the value of such coordination of demand and renewable generation, I’ve found that there are three types of views among the few people who think about such things: naïve, glib, and correct (uh, that is, the one I agree with).

CAISO Duck Curve, Feb. 7, 2019

Naïve: “I will shift my electricity use towards hours when there is a lot of renewable electricity on the grid. That way a larger share of the electricity I use comes from renewables.” This may sound right and feel right, but that’s not how an electricity grid works. The immediate impact of your consumption on the amount of renewable power generation, or on the level of GHG emissions, depends on how generation changes incrementally (what economists call “on the margin”) as demand changes.

So, to know whether your consumption is “green” you need to know how the grid operator is adjusting generation in the system for incremental increases or decreases in demand. A colleague of mine blogged a few years ago about software (created by former Berkeley PhD student in environmental economics, Gavin McCormick) that can make a really well-informed estimate of how the grid is adjusting to marginal demand changes, and the emissions effect of those adjustments.

Unfortunately, production on the margin is typically dirtier than the overall average and much dirtier than 100% wind or solar. That leads us to Glib.

Glib: “When you increase or decrease your consumption, the grid operator adjusts production from a controllable power plant, which is almost never wind or solar. Most of the time, it is from burning natural gas or, occasionally, coal. So, your consumption is almost never green, regardless of the time or how much renewable power is on the grid.” This response is partially right, but it misses two important points.

The first point is that California is so deep in intermittent renewables these days that there are times we are just throwing it away, that is, curtailing production from wind and solar plants. More demand in those hours means less curtailment; in other words, wind and solar are occasionally on the margin.

The second important point is what gets us from Glib to Correct.

Correct: Shifting your demand from one hour to another causes prices to rise in hours that get more demand and fall in hours that get less. So, moving your electricity consumption to correspond with production from wind and solar means that those intermittent renewable generators get a larger share of the total revenues paid to producers without changing their production.

That makes investment in a wind or solar plant more profitable, and that leads to more investment in these technologies. “Shifting my demand is raising profits for wind and solar plants” just doesn’t have the same warm and fuzzy feel as “my electricity comes from a wind or solar plant”, but it has more basis in reality.

In fact, recent work by Jim Bushnell and Kevin Novan (which they will present at the Energy Institute’s 2019 POWER research conference next week, a few seats are still available) shows the importance of changes in the supply/demand balance over the day. They find that increasing California grid-scale solar capacity from 2GW (about where we were in 2013) to 10 GW (about the 2017 figure) has added so much mid-day supply that it has reduced wholesale average prices in those hours from around $40/MWh to about $15/MWh. When you run a solar plant with virtually zero marginal cost, that $25 drop is almost all lost profits.

Source: wired.com

At the same time, Bushnell and Novan show that California’s increased solar generation has raised prices in the evening when the sun sets and other (mostly fossil) plants have to rapidly fill in. When you time your consumption to coincide with solar production you are helping to reverse that redistribution, making solar investments more attractive and reducing the need to keep as much fossil fuel capacity standing by to ramp up in the evening.

Of course, if customers had the option to pay retail prices that reflect those wholesale fluctuations, just responding to those prices would steer their consumption to the hours of abundant renewable generation. As we put more intermittent renewables on the grid, dynamic retail pricing will be ever more critical for achieving a sustainable energy system.

So, no, you’re not getting green electrons by charging your EV or heating water when the sun is shining. You are doing something more important: creating financial incentives for more renewable generation investment. And also making sunset a little bit less exciting at the CAISO.

Severin Borenstein is E.T. Grether Professor of Business Administration and Public Policy at the Haas School of Business and Faculty Director of the Energy Institute at Haas.

This piece was originally published on the Energy Institute at Haas blog.

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